At May 1, 2010, Deitrich Company had beginning inventory consisting of 100 units with a unit cost of $7. During May, the company purchased inventory as follows:
200 units at $7
300 units at $8
The company sold 500 units during the month for $12 per unit. Deitrich uses the average cost method. Deitrich's gross profit for the month of May is
A) $2,250.
B) $3,750.
C) $4,500.
D) $6,000.

Question

Quizplus · Accepted Answer

The average cost per unit is $7.50 ($2,250 / 300 units). The gross profit is $4.50 per unit ($12 - $7.50). The gross profit for the month is $2,250 ($4.50 x 500 units).

At May 1, 2010, Deitrich Company Had Beginning Inventory Consisting